U of I researcher predicts lifestyle changes tied to gas price

Thursday

May 29, 2008 at 12:01 AMMay 29, 2008 at 11:03 PM

Ditch the SUV, move to the city and get a new job. By the way, $3-per-gallon gasoline is probably a fond memory. At least that’s a University of Illinois researcher’s take on the mega-trends to come in the car-buying, housing and working/commuting patterns of U.S. consumers if $4-per-gallon gasoline prices, or higher, persist.

Tim Landis

Ditch the SUV, move to the city and get a new job. By the way, $3-per-gallon gasoline is probably a fond memory.

At least that’s a University of Illinois researcher’s take on the mega-trends to come in the car-buying, housing and working/commuting patterns of U.S. consumers if $4-per-gallon gasoline prices, or higher, persist.

Professor of finance Don Fullerton, who also served as a deputy assistant in the U.S. Department of the Treasury during the Reagan administration, said in his prognostication released Thursday there already are signs of change.

“You see Ford Motor Co. cutting back on production of SUVs. They are looking down the road and thinking about what people are going to want. Companies are cutting back on big cars and planning more smaller hybrids generally,” said Fullerton, who added that U.S. automakers have some catching up to do with Toyota and Honda.

Fullerton said reports from organizations such as AAA show consumers already are cutting back on short trips, vacations and discretionary spending as a result of high gasoline prices. Mass-transit use also is up.

Among his predictions for fundamental lifestyle changes if high energy prices persists:

-A gradual migration back to the cites and away from the suburbs; rising property values in cities and falling values in suburbs as a result.

-Lower prices for SUVs and higher prices for hybrids, including used vehicles, as demand rises for fuel-efficient vehicles.

-Job switching to get closer to work. More companies allowing employees to “telecommute” by working from home.

Fullerton said Chicago is an example of a city where there is more emphasis on condo development in the core city, bike trails and greater use of mass transit. Smaller cities eventually will be affected, too, he said.

“I don’t expect anybody to throw away their old cars and SUVs. It takes awhile to change responses, and there’s a whole lot of cars already out there,” Fullerton said.

As for gasoline prices — the average $4.08 per gallon in Springfield this week is 78 cents higher than a year ago — Fullerton said a return to $3-per-gallon gasoline is unlikely.

“In the short run, it could be up and down, but we seem to be in this for the long haul,” he said.

Tim Landis can be reached at (217) 788-1536 or tim.landis@sj-r.com.

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